Keeping the current house and buying a bigger one to live in

saajan_12

Leaving aside the question of whether to become a LL which others have covered and assuming the choices are between (A) buy a new residential and let current property; and (B) sell current, buy residential then buy a BTL

1. SDLT - depends on the relative values. Option A means you pay the 3% extra SDLT on the higher value property that you'll live in, nothing on the rental. Option B means you'll pay the base SDLT and 3% extra on the lower value rental. I suggest coming up with some estimates for both. 
   
   
2. CGT - likely to be even stevens unless you know that there's been a boom in value of your current property already. If you lived there for 10 years then let it for 5 years, then you pay CGT for the time you didn't live there  ie 1/3 (plus there's some allowances, 9 months extra etc). If you already had a big boom then that 1/3 could be higher than the full CGT on a property you bought now. But hard without a crystal ball on values plus policies when you actually sell
   
   
3. Suitability - is your current property actually suitable for renting? eg can the typical renting market use that space effectively? Say a large family home may be suited to people who are ready to buy, or as an HMO but then that introduces more licencing considerations. In a working city, a smaller unit may be perfect as a starter home for typical renters. 
   
   
4. Transferring to LTD company - For option A, you'd have additional SDLT on the transfer unless you gift the property. But then the company retains a lot of money, which it will pay corporation tax on, and to extract it you may need to pay dividend tax again, so may end up more than your 40% income tax if you left it in your name. For option B, you could mitigate this via a directors loan as you'll have the SDLT anyway, but still an issue. 
   
   
5. Edge on buying chain free - I think this has limited benefit.. if the seller has a chain the other side, then the process will be slow anyway. Even if not, I think most people will have a low ££ tolerance before they'll prefer to wait than accept less money. And then complain about it. Yes its possible they have a real urgency to sell, but its not predictable enough to base your other decisions on this possibility.